Plight of Pacifica business sheds light on larger cannabis woes

Google “California cannabis business” and see the evidence of an industry in crisis. Headlines like “California North Coast cannabis industry continues to be challenged” and “California cannabis company’s default highlights debt woes.” And, as the Los Angeles Times detailed in a report last month, big-pocketed cannabis corporations have led to a new wave of political corruption from “the rugged mountains near Oregon to the desert along the Mexican border.”

Closer to home, the business hasn’t been a road to riches. Just ask Tony and Ana Leano-Williams, who have operated Seaweed Holistics at Rockaway Beach since 2020. They have poured their heart and soul into a business that some incorrectly think a license to print money. After an Oct. 1 Planning Commission ruling, they will lose their right to sell marijuana unless that ruling is successfully appealed.

The Planning Commission revoked the business’s Cannabis Activity Permit over the size of the window of the Dondee Way building. For reasons more opaque than the building siding, the city requires that 65 percent of the dispensary storefront be a window. The resulting dispute over how to calculate the store frontage and therefore the necessary window size has caused city fees to balloon from $4,000 to over $20,000. Even if that is ultimately ironed out, the couple would owe another $23,577 for a Cannabis Public Safety License ostensibly for the extra police work someone thinks is necessary for such businesses. This despite the city’s own analysis that there were no calls to Seaweed Holistics in the nearly two years it has been open.

And all that is small change compared to the $400,000 Thomas Rodriguez told planning commissioners he has sunk into his Coastside Cannabis business in Pacifica.

The Williamses say they have yet to make a profit from their cannabis business. In fact, in press report after press report, industry insiders say the legal weed business is at the brink of collapse.

How can that be when legal sales in the state were said to top $4.4 billion in 2020 alone? Well, first you should know the illegal market is twice that big, and those providers aren’t paying taxes or negotiating with municipalities over the size of their windows. Then there are taxes that add an estimated 50 percent onto the price for consumers of the legal product. The industry survivors are increasingly venture-backed big businesses that can afford to operate at a loss to grab market share. Forget equity and the importance of including Black-owned businesses, like Seaweed Holistics, after decades of inequity in the way marijuana laws were enforced.

Seaweed Holistics was given time to comply with the rules, and the city maintains that operators knew the rules when they signed on the dotted line. The revocation of the Cannabis Activity Permit was a first in the city of Pacifica. It may be the last. But the legal pot industry is in trouble across the state. This cannabis cash cow may not live much longer unless state and local government rethink regulations and fees that are drowning honest business people like the Williamses.

— Clay Lambert